How to Swing Trade for Beginners

How to Swing Trade for Beginners

First of all, there’s a huge
difference between trading and the “buy and hold” approach.

When trading, you have a proven
system and when swing trading, you’re typically holding a stock for 5 to 20
days, so you have a rather short-term horizon.

Now on the other hand, when
you’re following a “buy and hold” approach, you often hold a stock
for a month, years or in the case of Warren Buffett, maybe even for decades.

Not so with swing trading
stocks.

Again, swing trading stocks, a
short-term approach, following a proven system. But when I say, “proven
system”, what do I mean by this?

How to Swing Trade: There’s 3 things that you need to know

First, when swing trading
stocks, you need to know what stocks to trade.

Second, you need to know
exactly when to enter.

Third, you need to know when to
exit – and when exiting, there’s always two ways.

It’s either exiting with a
loss, and you want to keep your losses small if the trade goes against you, or it’s
exiting with a profit if the trade moves in the right direction.

These are the 3 main things.
What stocks trade. When To enter. When to exit.

Now let’s talk about what stocks to trade

Most people think when trading
stocks they should trade one of these ‘mainstream’ stocks and what do I mean by
this?

For example, Tesla or Facebook.
Netflix. Twitter. That’s actually not very smart. And I’m going to show you right now why that is.

Let’s take a look at Tesla. Look at this. This stock is moving all over the place.

What do I mean by this? I mean
it goes from 240 up to 360. Down to 250 again, up to 380.

This is crazy and here’s why

Tesla and Elon Musk are in the
news all the time. Elon Musk is tweeting stuff like crazy. You remember last
year in 2018, he tweeted that he’s taking this company private.

“I’m done with this. I’m
taking it private.” After he said he’d take it private at a price of 360, you’ll
see on the chart that just overnight, Tesla jumped way up like crazy.

Then the S.E.C. said, “you can’t do this” and the S.E.C. started an investigation.

After a while, they settled with him. But when they started an investigation, Tesla was plummeting.

Once they settled everything
seemed to be good. Then Elon Musk tweets “the S.E.C… They are…”
Whatever. So, he was publicly bashing them. And this is not what the S.E.C. and
investors like, so they got nervous and by this, Tesla made lows again.

And that’s when they announced
that there are production difficulties. There’s always something going on in
the news and this is why it’s jumping up and down like crazy.

Now let’s compare Tesla to a stock that I
personally like to trade

Look at this: CRC, nicely going up and down and up and down.

It has really, really nice
trends. Now here’s the deal. As you can see, it’s not going up from the lower
left to the upper right.

And it doesn’t have to, because...

As a trader, you can participate in these short swings to the upside as well as to the downside. Yeah, that’s true.

As a trader, when you’re swing
trading stocks, you can make money even if the market or the stock is falling.

The most important thing when selecting the
right stock for swing trading is finding a stock that has nice swings.

Let me show you an example of ‘not’ nice swings. Twitter.

Mainstream, right? I mean, look
at it. There’s a gap, then it’s railing all the way up. Then something happened
and BOOM, it crashed down and down. This is all over the place.

Here’s another example of a stock that I like: PEN.

I recently traded PEN and as
you can see, it’s nicer. Going up and down, and up and down like waves in the
ocean. This is what you really want.

Now compare this to Tesla, which is all over the place versus stocks like W or PEN. Those are the stocks that I like to trade.

You have to make sure that
you’re selecting the right stock, and now you know not to select any mainstream
stocks like Facebook, Twitter, Tesla or Apple. They’re all over the place.

You want to trade stocks that
are a little bit under the radar because for example: CRC, I don’t even know
what they’re doing. Nobody probably knows what they’re doing, and nobody knows
who their CEO is. Whatever the CEO is tweeting, it doesn’t really matter.

Recap: 3 Steps How to Swing Trade

1. You need to know watch to
trade, what stock to trade and you want to trade stocks that are nicely going
up and down, and up and down.

2. You want to know when
exactly to enter and I’m doing this based on indicators. We’ll cover this in
another article.

3. You need to know when to
exit. When to exit with a profit when the trade goes your way, and also when to
exit with a loss when it goes against you.

As you can see, swing trading
for beginners is perfect and it can be fairly simple. Don’t make it more
complicated.

The beautiful thing is that when
you’re using indicators, you don’t have to worry about all these fundamentals, PE
ratios and EPS and so on.

Keep it easy. Keep it simple. That’s
how you can succeed with stock trading.

To learn exactly how I trade, when I enter and when I exit, visit My Daily Trading Routine now. You’ll find a 35-minute video absolutely free to you, no opt-in needed.

Trading Futures, options on futures and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. The lower the day trade margin, the higher the leverage and riskier the trade. Leverage can work for you as well as against you; it magnifies gains as well as losses. Past performance is not necessarily indicative of future results.